Chennai 600 034 v. The Commissioner Of Income Tax, Aayakar Bhavan, 121, Uthamar Gandhi Salai, Chennai 600 034

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 05.02.2020C O R A MTHE HONOURABLE MR.JUSTICE C.SARAVANANW.P.No.3241 of 2011& WMP.No.3 of 2011 PPN Power Generating Company Pvt. Ltd.,Rep.by its authorised representative III Floor, Jhaver Plaza, 1A Nungambakkam High road, Chennai 600 034. ... Petitioner Vs. 1. The Commissioner of Income Tax, Aayakar Bhavan, 121, Uthamar Gandhi Salai, Chennai 600 034. 2. The Assistant Commissioner of Income Tax, Company Circle V(II), 121, Uthamar Gandhi Salai, Chennai 600 034. 3. The Deputy Commissioner of Income Tax, Transfer Pricing officer V (I/C), 121, Uthamar Gandhi Salai, Chennai 600 034. ... Respondents Prayer : Petition filed under Article 226 of the Constitution ofIndia, to issue a Writ of Certiorari, calling for the recordscomprised in the impugned reassessment notice dated 25.02.2010for the Assessment year 2004-05 issued by the second respondentand received by the petitioner only on 08.09.2010 Under Section148 of the Income Tax Act, 1961 and the consequentialproceedings initiated by the third respondent by the impugnednotice dated 27.01.2011 bearing reference C.R.No.P.507/TPO-V/A.Y.2004-05 pursuant to a reference under S.92CA of the Act bythe second respondent in respect of Assessment Year 2004-05 andquash the same as wholly without jurisdiction, illegal, 1 arbitrary and contrary to the express mandates set out under theprovisions of the Income Tax Act, 1961. In this writ petition, the petitioner has challenged theimpugned re-assessment notice dated 25.02.2010 issued by the 2ndrespondent under Section 148 of the Income Tax Act, 1961reopening of the Assessment Year 2004-05 and consequentialimpugned notice dated 27.01.2011 issued by the 3rd respondent. 2. An order dated 30.03.2005 came to be passed by the 3rdrespondent under Section 143(1) of the Income Tax Act, 1961. Itwas granted a refund of Rs.37,49,210/- to the petitioner.Pursuant to the aforesaid order, the petitioner had also filedRevised Return on 31.10.2005. 3. Thereafter, notices were issued under Section 142(1)and (2) on 16.6.2006, 12.07.2006 and 03.11.2006. The petitioneralso replied to the same. By a communication dated 13.11.2006,the petitioner requested the Additional Commissioner of IncomeTax, to complete the Transfer Pricing Assessment on the merits. 4. The Additional Commissioner of Income Tax, TransferPricing Officer - II (I/C) has thereafter passed an order dated17.11.2006 and confirmed that no adjustment is considerednecessary to the value of international transaction entered intoby the petitioner. Accordingly, an assessment dated29.12.2006 was passed and the petitioner was directed to pay asum of Rs.1,93,92,029/-. 5. The petitioner therefore preferred an appeal beforethe Commissioner of Income Tax (Appeals) -V, against the aboveassessment order dated 29.12.2006 passed under Section 143(3)read with Section 92CA(4) of the Income Tax Act, 1961. 6. The Commissioner of Tax (Appeals)-V by an order dated30.07.2007 passed a detailed order and partly allowed the appealfiled by the petitioner. 7. By a communication dated 12.09.2007, the Income tax 2 https://hcservices.ecourts.gov.in/hcservices/ Officer also given effect to the order of the Commissioner ofIncome Tax (Appeals). Revenue thereafter preferred an appealbefore the Income Tax Appellate Tribunal in I.T.ANo.2393/Mds/2007. The Revenue's appeal was partly allowed bythe said Tribunal vide its order dated 02.03.2009. 8. The petitioner had thereafter filed T.C.A before thisCourt. During interregnum, the impugned notice dated 25.02.2010has been issued under Section 148 of the Income Tax Act, 1961 tothe petitioner, to reopen the assessment. By a letter dated16.09.2010, the reasons for reopening of the assessment has beencommunicated. The relevant portion of the said communicationreads as follows:- 7. By a communication dated 12.09.2007, the Income tax 2 https://hcservices.ecourts.gov.in/hcservices/ Officer also given effect to the order of the Commissioner ofIncome Tax (Appeals). Revenue thereafter preferred an appealbefore the Income Tax Appellate Tribunal in I.T.ANo.2393/Mds/2007. The Revenue's appeal was partly allowed bythe said Tribunal vide its order dated 02.03.2009. 8. The petitioner had thereafter filed T.C.A before thisCourt. During interregnum, the impugned notice dated 25.02.2010has been issued under Section 148 of the Income Tax Act, 1961 tothe petitioner, to reopen the assessment. By a letter dated16.09.2010, the reasons for reopening of the assessment has beencommunicated. The relevant portion of the said communicationreads as follows:- "It is noticed the provisions for anticipatedcontract losses of Rs.7474 lakhs to be added back incomputing the book profit under Section 115 JB asthe same is only provision and not an ascertainedliability." 9. Meanwhile, the 3rd respondent by a communication dated27.01.2011 has called upon the petitioner to furnish informationin terms of Section 92D and Section 92E of the Income Tax Act,1961 as per the questionnaire enclosed. 10. It is the contention of the learned counsel for thepetitioner that the proceedings initiated by the impugned noticedated 25.02.2010, to reopen the assessment was contrary to thelaw settled by the Honourable Supreme Court in CIT Vs.Kelvinator of India, (2010) 2 Scc 723 and that of anotherdecision of the Honourable Supreme Court in Asst Commissioner ofIncome Tax Vs. Rajesh Jhavari Stock Brokers Private Limited(2007) 161 Taxman 316. 11. Heard learned counsel for the petitioner and thelearned standing counsel for the respondents. 12. There are several disputed questions of fact whichconnot be considered by a Court in exercise of its jurisdictionunder Article 226 of the Constitution of India. 13. The reason for reopening the assessment appears to beon account of operational expenses claimed by the petitionerwhile filing returns. 14. Issue as to whether there was true and fulldisclosure at the time of filing of returns or not and whetherthe respondent could reopen the assessment under Section 148 ofthe Income Tax Act, 1961 and whether the reasons for reopening 3 https://hcservices.ecourts.gov.in/hcservices/ the assessment was on account of change of opinion or not has tobe only decided by the respondents. 15. Further, as per Section 147 of the Income Tax Act,1961, if the circumstances contemplated under the 1st provisoare not satisfied, the assessing officer cannot further proceedas the expression used is "unless any income chargeable to taxhas escaped assessment for such assessment year by reason of thefailure on the part of the assessee to make a return undersection 139 or in response to a notice issued under sub-section(1) of section 142 or section 148 or to disclose fully and trulyall material facts necessary for his assessment, for thatassessment year." 16. Therefore, I direct the petitioner to participate inthe adjudication mechanism prescribed under the provisions ofthe Income Tax Act, 1961 before the respondents. Petitioner isalso directed to furnish the information called for by the 3rdrespondent in the questionnaire enclosed along with the noticedated 27.01.2011 within such period. Petitioner may also fileits representations and raise all the objections/defences ifany, both on facts and law that are available to, within aperiod of thirty days from date of receipt of a copy of thisorder, before the respondents. 17. Respondents are thereafter directed to passappropriate order in accordance with law within a period ofthree months from date of receipt of a copy of this orderkeeping in mind the express requirement of the proviso toSection 147 of the Income Tax Act, 1961 and the settledprinciples of law. 17. Respondents are thereafter directed to passappropriate order in accordance with law within a period ofthree months from date of receipt of a copy of this orderkeeping in mind the express requirement of the proviso toSection 147 of the Income Tax Act, 1961 and the settledprinciples of law. 18. This Writ Petition stands disposed with the aboveobservation. No cost. Consequently, connected MiscellaneousPetition is closed. Sd/- Assistant Registrar //True Copy// Sub Assistant Registrar av/jenTo 1. The Commissioner of Income Tax, Aayakar Bhavan, 121, Uthamar Gandhi Salai, Chennai 600 034. 2. The Asst. Commissioner of Income Tax, Company Circle V(II), 121, Uthamar Gandhi Salai, Chennai 600 034.3. The Deputy Commissioner of Income Tax, Transfer Pricing officer V (I/C), 121, Uthamar Gandhi Salai, Chennai 600 034. +1cc to Mr.A.P.Srinivas, Advocate SR.9384+1cc to Mr.R.Parthasarathy, Advocate SR.9280 W.P.No.3241 of 2011 RLD(CO)CB(13/07/2020) 5